August 23, 2012
Media Release - Time to Privatize Canada’s Airports
Airport Policy in Canada
Winnipeg/Ottawa: The Frontier Centre for Public Policy today released Airport Policy in Canada. This research paper examines evidence from Canada, the United States and the United Kingdom and concludes that privatizing Canada’s airports would lower costs for consumers and promote economic growth.
The government announced the transfer of government owned airports to not-for-profit corporations in 1987. In 1992, the first transfers occurred with the airports of Vancouver, Calgary, Edmonton and Montreal. Ms. Bennett shows that this step did not do nearly enough to improve competitiveness or efficiency. “The not-for-profit model has constrained rather than enhanced growth and represents little more than an intermediary step before privatization,” writes Bennett.
One of the clearest signs that Canada’s airports are uncompetitive is the fact that approximately five million Canadians cross the border to fly out of American airports each year. High rents to the federal government under the not-for-profit model drive up prices at major Canadian airports, leaving them uncompetitive with nearby American airports. This drain of consumers across the border creates negative effects that go far beyond the airports themselves. Extensive research shows airport hubs boost business productivity, increase the effectiveness of ‘just-in-time’ manufacturing, create economies of scale, promote tourism and ultimately boost GDP.
Bennett notes an international trend towards airport privatization, and demonstrates that a privatized model can enhance the competitiveness of airports in Canada. Britain spearheaded this process with Margaret Thatcher’s sale of the British Airport Authority. Privatization in the UK has been a major success. For example, since privatization, aircraft movement, passenger numbers and cargo carriage have all increased significantly at Heathrow airport. Furthermore, customer satisfaction at Heathrow remains high, even as traffic has increased substantially.
Given the international evidence in favour of privatization, Ms. Bennett concludes that this approach can bring tangible benefits to Canadian consumers and to the economy as a whole. “Privatized Canadian airports, with pricing and competitive restraints, could answer accountability concerns, provide airports with consistent long-term financing, lower taxes and fees to users and enhance the Canadian economy.”
Download a copy of Airport Policy in Canada Here. For more information and to arrange an interview with the study's author, media (only) should contact:
The Frontier Centre for Public Policy
is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."